Selling a Rental, taking some Boot?

[Nick Boyd]

Hello, first time posting here. 

I'm contemplating the sale of a rental property I own. I have a net equity (after commission + repair allowance) of $116k in the property. The home is worth 300k. I'm wondering if a 1031 exchange is appropriate, given what I want to do:

1. Of the $116k, I want to pay off ALL of my non mortgage debts with $35,000. This is necessary for me to improve my DTI so that I can qualify for step 2:

2. Purchase a multifamily property around $320k with the remainder of the equity (approx. $80,000 down). I am targeting cash flow, which would be much better in multifamily in the markets I'm considering.

I have a wide degree of latitude with how my Business Schedule C looks (whether or not I maximize write offs to reduce my tax bill or keep the number high to improve loanability). I've read in some places that a married couple filing jointly pays a 0% capital gains tax if they earn under $77k or so per year, which we should be able to reflect on our Schedule C with appropriate write offs. Does this ALSO apply to the sale of investment real estate? If so, does the net proceeds from the property sale contribute to this number, or is this just in reference to our AGI as a household? 

I'm trying to avoid paying taxes on cash boot, if possible. And, if I can avoid a 1031 entirely so that I have more time to locate the replacement property in our slim market, that would also be ideal.

Anyone out there with knowledge of 1031s, taxes, etc?? All opinions and suggestions welcome! 

Thanks very much!